To Do Job Effectively, Motor Carriers Need Revenue Consistency from Shippers
Aug 1, 2001 12:00 PM
I enjoyed reading the July Editorial, “Pace of Change Marches On.” The more things change, the more things stay the same: new people without the understanding of the resources that are at their disposal. Why is it that our shippers will spend money for consultants and will not foster the relationship with their carrier/supplier to find out how to do a better job and increase their market share in any type of economy?
Lower freight rates and open bidding versus working in mutual ways to improve the distribution process and satisfy the customer, who pays the bills by buying our shipper's products.
The shipper thinks nothing about progress payments for major construction projects but would not make monthly payments to his carrier. The carrier is a transaction-based supplier that is dangled a large volume of freight potential for the lowest possible cost without any guarantee of load volume.
The carrier needs consistency to provide infrastructure to move freight safely, employ long-term people, and invest in new equipment and cost-saving methods. The carrier has the worst of all worlds: labor and debt with no guarantee of volume — much less consistency. The carrier's suppliers (banks, labor, energy, government taxes) require weekly or monthly payments, but the shipper only pays when the carrier moves a load.
We are all accustomed to pay for gas and electricity on a budget basis (monthly) to minimize fluctuations and allow the utility to forward price. The shipper will not do this for his carrier, yet expects the carrier to absorb peaks and valleys and be ready and waiting to invest in specialized equipment for nonguaranteed demand and to be rebid with the arrival of a new purchasing manager for a lower price.
I offer two- to three-year contracts with guaranteed freight charges, one check prepaid for estimated annual volumes, and monthly recaps on loads/revenue against the annual volume. This approach gives a consistent, known cost of transportation, takes out the transaction cost to process/pay each freight bill, and discounts cost for pre- vs post-pay — yet I have no takers. On 1,000 loads per year with a customer, we would have cut $35,000 from the process for receiving one freight payment check per month (that could even be faxed, so no mail is needed). Yet the shipper was reluctant to prepay me. I have been transporting for him for more than 25 years — I'm not going anyplace.
I was excited about new people and bottom-line focus. Yet it's still the same game: a master/slave relationship done over the Internet. It's like trying to negotiate with yourself. Everyone wants lower costs but will not pay the price to develop and foster a partnership in more than name only.
There has got to be an acceptance of the carrier as a business equal. Stores must buy in volume and pay for them to get the volume price break. This does not happen in our industry. We give the volume price and invest resources for a promise — and today, not even a kiss.
Change is exciting. Change for change's sake is not!
Frank L Sibr Jr
President, Frank J Sibr & Sons Inc
Government Intrusion Seen as Bigger Concern
This letter is in response to the Editorial entitled “Distracted Driving Needs More Attention,” which ran on page 6 of Modern Bulk Transporter's June 2001 issue:
No one wants to have distraction cause an accident, but even more so, I do not want more government intrusion into my life or vehicle. Whether it is a cell phone, lipstick, or kids that's the source for a possible distraction, it should ultimately come down to personal responsibility when operating a vehicle. The same with seatbelts or helmets for motorcycle riders. Sure, it's wise to wear them, but don't force me to wear them — it should be a personal choice.
I saw recently where the AAA (American Automobile Association) made a statement saying talking in cars created a distraction. Just where will it all end?
Phillips Petroleum Company
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